By Kristina Peterson
Investors looked set to enter the long weekend on a high note,
riding an encouraging jobs report to send the stock market to its
best pre-Labor Day week in two decades.
The Dow Jones Industrial Average (DJI) gained 97 points, or
0.9%, to 10417 in mid-afternoon trading, putting the Dow up 2.6% on
the week -- its first positive weekly showing since the beginning
of August. The Dow also edged back into positive territory for the
year to date, though it dipped above and below that measure
throughout the afternoon.
The market leaped at the open after nonfarm payrolls data showed
jobs slowing at half the rate predicted by economists. The Labor
Department said the U.S. lost 54,000 jobs last month, about half of
what economists had expected and matching the level of revised
losses recorded the previous month.
The unemployment rate, calculated using a separate household
survey, edged up to 9.6%, as expected, from 9.5% for the previous
two months.
"In the last two weeks or so, things have been starting to firm
up, and today's jobs numbers really put an exclamation mark on
that," said Phil Orlando, equity strategist at Federated Investors.
"We're feeling a lot more comfortable about our view, than those
thinking about a double dip."
Mr. Orlando predicted that stocks would pick up after Labor Day,
as vacationing money managers return to an economy whose outlook
has improved.
"If you had a bearish bent in the middle of August when you went
on vacation, the story seems different today -- it seems
constructive," he said.
Not everyone was impressed. Bob Browne, chief investment officer
at Northern Trust Global Investments, said the addition of new
private-sector jobs is "not enough to absorb new entrants into the
work force let alone put the unemployed from the past few years
back to work," adding: "We have a long way to go."
But even slowing job losses was "enough to give us a catalyst on
a light day going into a long weekend," he said.
The Nasdaq Composite (RIXF) increased 1.2% to 2227, and is on
track for a weekly gain of about 3.5%. The Standard & Poor's
500-stock index (SPX) tacked on 1% to 1101, putting its advance for
the week at 3.6%.
Goldman Sachs (GS) rose 5.6% as financial stocks led the day's
and week's gains. Morgan Stanley (MS) gained 3.5%, J.P. Morgan
(JPM) added 2.2% and Genworth Financial (GNW) advanced 5.7%.
Friday's jobs numbers followed recent reports on manufacturing
and housing that also came in above expectations, extending a
notable reversal from a long string of disappointing data that had
driven the Dow's biggest August drop since 2001.
This week's better-than-expected data helped the Dow start
September with a bang, marking its best three days at the start of
a month since March 2009.
Volume was light, with about 2.7 billion shares changing hands
in NYSE composite trading as of 2:45 p.m. EDT, on pace to fall
short of 2010's daily average of about five billion shares.
"Right now the buyers are coming out because we have had some
positive news on a relative basis," said Jeffrey Phillips, chief
investment officer of Rehmann. "But certainly the volume is not
anywhere near what I would like to see."
The strong start to the month comes as investors have been
encouraged that a double-dip recession may be avoided. But the
economic recovery still looks weak; data released Friday by the
Institute for Supply Management showed a slowing expansion in the
U.S. nonmanufacturing sector last month.
The U.S. Dollar Index (DXY), reflecting the U.S. currency
against a basket of six others, declined 0.5%. Treasurys slipped,
pushing the yield on the 10-year note up to 2.71%. Crude-oil
futures dropped to $74.34 a barrel, while gold futures also
slipped.
On the deals front, Goldcorp (GG) slipped 2.5% after the gold
miner agreed to acquire all outstanding shares of Andean Resources
for $3.4 billion. Andean's principal asset is the Cerro Negro gold
project located in Argentina. .
Shares of Take-Two Interactive Software Inc. (TTWO) rallied 10%
after the company reported an unexpected quarterly profit and said
it expects a fiscal-year profit. .
Tax-preparation company H&R Block Inc. (HRB) climbed 8.2%
after reporting a smaller-than-expected loss from continuing
operations.
Campbell Soup Co. (CPB) slipped 2.4% after its fiscal
fourth-quarter earnings jumped 64% on prior-year write-downs, but
revenue at its soup business weakened.